oday’s crude oil rally has me feeling like the Yogi Berra quote “like déjá vu all over again” Last Thursday WTI crude staged a 5% pop only to give it all back on Friday. Today WTI is up another 5% taking another run at $50.00. The flimsy excuse for today’s pop was a small drop in US oil production but it’s going to take a lot of drops to put an end to the current market share war among suppliers, so this rally feels like too much too soon. Besides, with Iranian nuclear negotiations ongoing which could end with a reduction of sanctions, it’s easy to see how crude oil could be heading back in the other direction at any time. Still, these big short term swings
are great for trading creating opportunities for both sides.
Crude oil, along with other commodities and currencies, also benefitted today from a drop in USD. The greenback tumbled after US ADP payrolls came in below 200K and well below street expectations. ISM manufacturing PMI added to the growing pile of evidence suggesting the US economy slowed this winter and dragged on US indices. Grains, particularly wheat and soybeans clawed back some of their recent losses.
Gold and silver soared as USD pressure on them eased, with gold rallying back above $1,200/oz while silver gained 2.3% taking a run at $17.00/oz. CHF rallied along with gold while CAD and NOK were also among the top performers with the crude oil rally giving them a boost More rumours and denials about whether Greece could default or get more financial support continue to fly around which also may drive capital flows in and out of defensive havens.
AUD and NZD have been underperforming USD and their peers overnight. Iron Ore fell to another 52-week low overnight keeping concerns about the health of Chinese resource demand running high. Inflation and trade reports for Australia and New Zealand due today could spark action in both Dollars.
There have been no major developments following the US close today.
Significant announcements released overnight include:
US ADP payrolls 189K vs street 225K, previous revised up to 214K from 212K
US construction spending (0.1%) as expected
US crude oil inventories 4.7 mmbbls vs street 4.2 mmbbls
Manufacturing PMI reports:
Brazil 46.2 vs previous 49.6
Canada 48.9 vs previous 48.7
US Markit 55.7 vs street 55.3
US ISM 51.5 vs street 52.5
US ISM prices paid 39.0 vs street 38.0 and previous 35.0
Sweden 54.1 vs street 54.2
Norway 48.8 vs street 51.3
Spain 54.3 vs street 54.8
Italy 53.3 vs street 52.1
France 48.8 vs street 48.2
Germany 52.8 vs street 52.4
Greece 48.9 vs previous 48.4
Eurozone 52.2 vs street 51.9
UK 54.4 as expected
Upcoming significant announcements include:
10:30 am AEDT Australia inflation previous 1.3%
11:00 am AEDT New Zealand commodity prices previous 1.8%
11:30 am AEDT Australia trade balance street ($1.3B)
Midnight Fri AEDT Singapore PMI street 49.6
TBA Japan labor cash earnings street 0.7% vs previous 1.3%
9:30 am BST UK construction PMI street 59.8
12:30 pm BST ECB meeting minutes
8:30 am EDT US jobless claims street 287K
8:30 am EDT US trade balance street ($41.2B)
8:30 am EDT Canada trade balance street ($2.0B)
10:00 am EDT US factory orders street (0.4%)
10:30 am EDT US natural gas storage street (12 BCF)
1:00 pm EDT US Baker Hughes drill rig count previous 1,048
8:30 am EDT Fri US nonfarm payrolls street 245K vs previous 295K
8:30 am EDT Fri US private payrolls street 238K vs previous 288K
8:30 am EDT Fri US unemployment rate street 5.5%
8:30 am EDT Fri US average hourly earnings street 2.0%
8:30 am EDT Fri US participation rate street 62.8%
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